Shares in Life Insurance Corp of India (LIC) fell 7.8 percent on its market debut on Tuesday, after India’s largest initial public offering (IPO) was dogged for weeks by concerns over a distressed global economy.
The government has raised approximately 205 billion rupees ($2.7 billion) by selling a 3.5 percent stake in the IPO, far from its original goal of raising up to $12 billion.
Shares in India’s largest insurer, which missed last year’s IPO frenzy, opened at rupees 872 each, compared to their issue price of rupees 949. They reached a session high of 918.95 rupees.
Below is a timeline of the government’s listing plans for LIC, which controls more than 60 percent of the Indian insurance market.
February 2020: The Indian government announces plans to sell part of its stake in LIC through a potential IPO to help meet a broader target of $29.6 billion in government assets for the fiscal year ending March 2021.
April 2020: LIC’s listing plans have been derailed as the COVID-19 pandemic is affecting fundraising plans for several companies due to market uncertainty.
Dec 2020: Sales are further slowed as the government begins to determine the insurance giant’s embedded value for the first time, an exercise that will ultimately take more than a year.
Embedded value is a measure of future cash flows in life insurance companies and the main financial measure for insurers.
February 2021: The government says it will sell about 10% of its shares in LIC by the end of March 2022.
January 2022: The government is setting itself a mid-March deadline to raise up to $12 billion through an IPO and is asking regulators to revise a draft prospectus quickly.
February 1, 2022: The government announces drastic cuts to plans to sell stakes in state-owned companies. The proposal to lower the overall divestment target lowers LIC’s IPO expectations to a 5% sale of its stake, up from 10% earlier.
February 3, 2022: The embedded value of LIC is finalized at more than 5 trillion rupees ($66.8 billion), Reuters reports. The market value of LIC is seen as two to three times the embedded value.
February 13, 2022: LIC submits its draft IPO paper with an embedded value of 5.39 trillion rupees.
The company management then starts holding virtual roadshows for potential investors.
February24, 2022: Russia invades Ukraine in what it calls a “special military operation,” mistreating global markets and driving many foreign investors in emerging markets to sell holdings.
February26, 2022: The Indian cabinet approves a policy change that allows foreign direct investment of up to 20% in LIC. Government officials continue to rely on an IPO by the end of March 2022.
March 1, 2022: Bankers advising LIC are forcing the government to delay the launch of the IPO due to the market shock of the invasion, Reuters reports.
Sources later confirm that the plan to list LIC will be postponed to the next financial year, starting in April.
April 22, 2022: New Delhi could halve its fundraising target for LIC’s IPO to about $3.9 billion after lowering valuation estimates following investor feedback, a government source says.
Apr 26, 2022: India submits IPO prospectus, further reducing the expected amount to about $2.7 billion from the sale of a 3.5% stake, just a third of original estimates, after investors explored the growth potential of LIC in doubt.
May 2, 2022: LIC’s IPO opens up to an anchor investor subscription that eventually achieves strong demand and high pricing.
May 4, 2022: The IPO is open to subscriptions from retail and other investors.
May 17, 2022: LIC finally debuts on the stock exchanges, but falls 7.8 percent on the trading day. Analysts predict more pain for investors amid volatile market conditions.